RACHEL SAKURAI, COMPUTERSHARE INVESTOR SERVICES GM QUEENSLAND
Fintech, blockchain, disruption, innovation – these are the buzzwords and hot topics that currently saturate the airwaves and are almost certainly not ones that would spring to mind when thinking about big process-driven registry companies. For listed companies the process of signing up a registry provider for the first time or undertaking a periodic review of service providers, is often regarded as an exercise in cost management.
There is a commonly held view that all registries provide much the same service, so at the end of the day it just comes down to price. Investment banks foster this perception by putting out RFPs for IPOs that require registries to submit a blind response by following a templated tick the box approach. No details are provided about the client, not the number of shareholders, where they are located or what specific needs their shareholder base might have now or in the future – so the recommendation will inevitably be made on the basis of price and price alone.
The JP Morgan and Governance Institute’s annual survey of registry providers confirms that cost remains an important consideration with ~30% of companies in the ASX200 considering it to be critical. However once the service has been put to the test the factors that would make a company in the ASX200 change its provider are overwhelmingly focused on quality of product and service (~80% of companies classify this as critical) and the account management relationship (critical for ~50% of companies). When registry contracts are signed for periods up to five years, rectifying a problem is not a quick fix and can be costly.
So where does innovation fit into this? It would be safe to assume that the largest companies with the biggest registers are likely to exercise the greatest influence over where registries focus their efforts in product and service development. The survey asked this question for the first time in 2015, identifying that 40-55% of the ASX20 consider innovation as critical. So in the context of your registry, what does innovation really mean and how do you know whether you’re partnering with an innovative provider?
Having worked in the registry industry for over 13 years I am very aware that it is often guilty of talking about improvements in customer service or repacking services that are already being offered and marketing them as something innovative. So a good first step is to ask a few questions:
- does the provider have an innovation strategy?
- how much is being invested into innovation?
- is there a structure that supports an innovative corporate culture?
What does an innovation strategy look like?
Computershare is one of Australia’s first Fintech companies. Established in the 1970’s, it has led the development of outsourced registry services ever since. Innovation has been at the heart its growth and has transformed the way share registers are managed across the globe.
A truly customer-focused approach is imperative now more than ever given the proliferation of new technologies; one that acknowledges that different types of shareholders need to be engaged in different ways and that offers a multi-channel experience that seamlessly connects all of the digital and offline interactions that a shareholder has with a company. We are currently focussed on developing the next generation of customer–focused services, products and processes designed to reduce controllable costs and improve stakeholder experiences to continue delivering unique benefits to our market.
Over a decade ago Computershare transformed Annual General Meetings, delivering the first online voting solution and online interactive annual reports. In 2007 the industry’s first online portal for investors was created, saving Issuers millions of dollars communicating to new shareholders. Fast-forward to 2016 and we were the first to offer shareholders the opportunity to vote at an AGM with their own device. This same technology will enable companies to offer virtual meetings.
Investing in Research and Development
Computershare leads the market when it comes to investing in research and development – we have invested more than $600 million into global technology over the past 5 years including data security, product development and first to market innovation. We have consistently committed more than 10% of annual revenues to technology; offering clients and their shareholders new ways to solve problems as well as simplifying and streamlining our operations.
A culture of Innovation
Our approach to innovation is based on our own staff from around the world presenting ideas to our in-house innovation centre in Melbourne, “The Garage”. We take the view that innovation can’t be outsourced as we know our industry best, we know our clients and we know their needs. We have established our own dedicated innovation team which is responsible for rapidly assessing the viability of new business ideas and initiatives in an agile yet systematic manner, using proven innovation techniques.
As a result, Computershare has a strong pipeline of technology development for the next three years in both its core registry and employee share plans businesses. We are developing to solve current needs but also planning for a future when Blockchain and the New Payments Platform become a reality.
Preparing for Blockchain
It is no secret that ASX has been planning for some time to replace the current CHESS system and the distributed ledger technology (blockchain) appears to be the favoured option. Blockchain has the potential to be deployed across financial market systems, including post trade clearing and settlement of securities and, if adopted, will represent a major change in the way the market operates. Computershare has been in active consultation with all key market participants ranging from clients through to custodians, investment banks and all the key regulatory bodies. In April this year we announced a joint initiative with British financial startup, SETL, to establish securities ownership registers using blockchain technology and also successfully demonstrated Australia’s first working blockchain capital markets solution – another first to market significant milestone for Australia.
Innovation is something that does require a formal process and without it companies or their business partner will be left far behind. Companies shouldn’t partner with a registry based on a tick the box RFP process, nor should the decision be a simple equation of price. Every company is different and the choice of registry should be one that reflects a tailored response to each company’s particular needs. The cost of moving can often be prohibitive once the selection has been made so it is critical that the right decision is made at the outset.